Navigating a Challenging Period: Goldman Sachs Faces Job Cuts, CEO Pay Cut, and Economic Uncertainty
Goldman Sachs is facing a challenging period in its long and illustrious history. The investment banking giant is coming off 3,200 job cuts in January, or about 6.5% of its workforce. To address rising expenses and falling revenue and profit, the bank began implementing a plan to eliminate about 3,200 positions, or 6.5% of its headcount, last month, which is one of its largest rounds of job reductions ever.
At a closed-door gathering with about 400 Goldman Sachs partners in Miami, Goldman Sachs CEO David Solomon informed them that as the environment was growing more complicated in Q2 of last year, every bone in his body believed they should have been much more aggressive in slowing hiring and reducing headcount. Solomon also said that the consensus has shifted to be a little bit more dovish in the CEO community that they can navigate through this with a softer economic landing.
Goldman Sachs is now expecting to put a tighter leash on hiring this year, and Solomon's pay for 2022 was $25 million, a 29% drop from 2021. Despite this, however, some Goldman partners are reportedly miffed over Solomon’s “penchant for living a glamorous life” and some have discussed who might replace Solomon if it comes to that.
At a Credit Suisse conference, Solomon said there is now a better chance of a softer landing than there was six to nine months ago. He also said that the number of leaks to the media about Goldman was damaging to the bank. A Goldman spokesperson said: “This leadership team set a clear strategic direction for Goldman Sachs and it’s working — delivering a 10.2% return on equity in 2022 and growing our book value per share 40% since our first investor day. These criticisms aren’t serious and they aren’t based in fact.”
Solomon also said that the US economy's prospects look better now than they did last year, but he warned that said he expects more sluggish economic growth, and that inflation remains sticky. Goldman Sachs is hoping to navigate this challenging period and come out on the other side stronger.
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1. “Goldman Sachs boss wishes he sacked staff earlier – report” Proactive Investors USA, 13 Feb. 2023, https://www.proactiveinvestors.com/companies/news/1005958/goldman-boss-wishes-he-sacked-staff-earlier-report-1005958.html
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3. “Goldman's CEO Says Business Leaders Are More Optimistic on Economy” Bloomberg, 14 Feb. 2023, https://www.bloomberg.com/news/articles/2023-02-14/goldman-s-solomon-says-ceo-consensus-has-become-more-dovish
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